'Cliff' damage in Southwest Florida could be blunted

The brinksmanship being played in Washington over the so-called fiscal cliff already has held back Florida's fragile economic recovery, economist and other experts say.

Under various worst-case scenarios, federal budget cuts would trim up to 140,000 jobs in the Sunshine State, with the Center for Regional Analysis at George Mason University coming in at a lowered estimate of 80,000. University of Florida economist David Denslow pegs losses at more than 130,000.

But there also are forces at work that could soften any blow, particularly in Southwest Florida: from the high-end appeal of the region's beach resorts to the fact that baby boomers -- regardless of the fallout from Washington -- are tired of waiting for their slice of sun.

Three sectors to watch for in Florida as the fiscal cliff saga plays out in the capital:

Defense most at risk

The biggest potential layoffs in Florida would be tied to broad federal cuts in defense spending.

Tampa, with its large military command presence, could take a hit, but defense contractors concentrated in Orlando, on the Space Coast and in the Panhandle are most at risk, says Jerry D. Parrish, chief economist at the Florida TaxWatch Research Institute.

Twenty Florida cities each received more than $1 billion in defense contracts between 2000 and 2011.

Roughly 25 percent of Northwest Florida's regional output is driven by defense spending. It is 13.7 percent in Northeast Florida, 5.3 percent in Central Florida and 2.8 percent in South Florida, Parrish says.

While lawmakers appear to have worked out a partial deal, the inconclusiveness on spending cuts is likely to drag on.

"We will have uncertainty again in a month to six weeks because we have to solve the debt ceiling," Parrish said.

Real estate insulated

But the already perky Florida markets for new and existing homes show no signs of waiting for Washington to make up its mind.

Instead, they are being fueled by mortgage rates that are at a 60-year low of 3.3 percent and by the impatience of northern baby boomers, who had put off retirement during the recession.

Whatever the results of the fiscal cliff, Florida Realtors economist John Tuccillo expects the state's residential real estate market to continue to recover.

Assuming that the nation's biggest fiscal problems are not resolved but only postponed, Tuccillo still expects residential sales to rise by 10 percent in 2013, prices to increase by 5 percent, commercial activity to revive and inventory to grow as the market improves.

Others also remain bullish on Florida real estate, even with rising taxes and spending cuts from the fiscal cliff.

To Lakewood Ranch-based homebuilder Pat Neal, going over the cliff would strengthen the nation in the long run, and encourage fence-sitting home buyers in states with high state income tax rates, such as New York and Pennsylvania, to make a move to Florida, which has no state income tax.

Neal, who sold 605 homes last year, said 70 percent of his market consists of a demographic group he calls "OPALS," or "Older People with Active Life Styles."

These buyers "have been postponing their purchases until now, and they are quite strong," Neal said. "We have a very strong recovery in Florida. I call it a demographic boom superimposed on an economic boom."

A vacation entitlement

Walter Klages, a tourism market researcher, mined a similar vein to Neal.

Though the worst-case fiscal cliff scenario could have an impact on some people's vacation plans, the demographic that gravitates to beaches from Anna Maria Island to Venice typically has a household income of roughly $100,000 per year, said Klages, who monitors the industry for tourism agencies in Sarasota, Manatee and other Florida counties.

"They are relatively insulated because they are upper-income," Klages said, adding that the tourists' trips he tracks view a yearly vacation as "an entitlement to themselves."

"They need it and they want it and they are going to take it," Klages said. "Yeah, they are going to be affected, but no, not to the point where they're going to ultimately say, 'I simply cannot take a vacation.'"

Also helping to soften any blow to tourism in Southwest Florida is the region's growing number of international visitors -- as high as 20 percent of the total at some points in the yearly cycle.

"The Germans spend more money per day and stay longer than any other tourist we go after," said Elliott Falcione, executive director of the Bradenton Area Convention and Visitors Bureau. "Think about that."